Japan Tobacco said Wednesday it was being probed by the European Union after a report it broke sanctions by shipping cigarettes to a firm linked to the Syrian regime, but denied any wrongdoing.
Japan Tobacco (JT), which is 50 percent owned by the government, insisted its Geneva-based subsidiary JT International (JTI) had done nothing wrong amid claims it supplied a firm with family links to President Bashar al-Assad.
The Wall Street Journal, citing corporate documents, said a shipment by JTI in May 2011 went to a firm that was at least partly owned by the Makhlouf family at the time.
The EU and the US say the Makhloufs, who are first cousins of Assad, are partially bankrolling the president's crackdown on the uprising in Syria.
The EU placed financial sanctions on Rami Makhlouf, the scion of the family, as well as on his brothers Iyad and Ihab, on May 23, 2011, for their alleged role in helping to finance Assad's actions.
Just four days later, JTI used a distributor based in Cyprus to deliver 450,000 cartons of cigarettes to Syria Duty Free Shops, a company JTI acknowledges was then at least partly owned by Makhlouf, the paper said.
JTI also delivered 4.2 million cartons of Winston cigarettes to Syria's state-owned tobacco company in May 2011, the report said.
The paper cited dissidents as claiming that cigarettes are used as a form of payment to irregular military forces by the regime.
They can also be used to obtain cash by selling them on for more than they cost, it added.
Japan Tobacco told AFP in Tokyo that it was doing nothing wrong.
"JT International (JTI), which operates the JT Group's international tobacco business, conducts its business in strict compliance with laws and adheres to all sanctions, including those imposed by the EU," JT said.
"JTI has stopped its shipments to Syria. Furthermore, JTI is fully cooperating with the EU authority's investigation by proactively providing them with the information and documents," it said in a statement.
While declining to give the exact date, a JT spokesman said the group stopped shipments to Duty Free Shops right after it came to light that a person on the sanctions list may be a shareholder of the company.
"All shipments to Syria have been stopped since February 2012" as the group made decisions in compliance with sanctions the EU decided on, he noted.
There was no immediate confirmation from the EU that an investigation had been launched.